The new draft bill includes a two-year ban on stablecoins that aren't backed by reserve assets. The post U.S. House Financial Services Committee Unveils Draft Stablecoin Legislation: Key Insights appeared first on Tokenist.
New Bill Mandates Stablecoins be Fully Backed by Reserves
Over the weekend, the House published a new crypto-related bill seeking a clearer ruling on stablecoins. The bill, which comes after the catastrophic collapse of Terra’s algorithmic stablecoin, would require stablecoin providers to maintain reserves backing their coins on an “at least one-to-one basis.”
The reserves could be made of US dollars, central bank reserve deposits, Treasury bills with a maturity of 90 days or less, and repurchase agreements with a maturity of seven days or less backed by Treasury bills with the same maturity.
The bill also seeks to task the Federal Reserve with approving and regulating non-bank companies that currently issue or want to issue their stablecoins. Circle and Tether are some examples of non-bank companies that currently have their stablecoins.
On the other hand, banks that want to issue their own stablecoins need approval from their main financial regulator, which could be the National Credit Union Administration, Federal Deposit Insurance, or Office of the Comptroller of the Currency.
Furthermore, any stablecoin provider that wants to do business in the US, regardless of where the company is based, would need to register. Those who fail to register could face up to five years in prison and a $1 million fine.
The bill comes as a House Financial Services subcommittee will hold a hearing on stablecoins on Wednesday in a session titled: “Understanding Stablecoin’s Role in Payments and the Need for Legislation.”
The hearing will feature some prominent figures from the crypto world, including Dante Disparte from Circle Internet Financial, the Blockchain Association’s Jake Chervinsky, Columbia Professor Austin Campbell, and New York Department of Financial Services Superintendent Adrienne Harris.
US Authorities Ramp Up Regulatory Efforts
The new stablecoin draft bill comes as US officials have been increasingly going after crypto firms following the 2022 crypto meltdown. The SEC, in particular, has been cracking down on digital asset companies.
Do you think the draft bill could further drive the adoption of stablecoins and cryptocurrencies? Let us know in the comments below.